Correlation Between Wartsila Oyj and Tokmanni Group
Can any of the company-specific risk be diversified away by investing in both Wartsila Oyj and Tokmanni Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wartsila Oyj and Tokmanni Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wartsila Oyj Abp and Tokmanni Group Oyj, you can compare the effects of market volatilities on Wartsila Oyj and Tokmanni Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wartsila Oyj with a short position of Tokmanni Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wartsila Oyj and Tokmanni Group.
Diversification Opportunities for Wartsila Oyj and Tokmanni Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wartsila and Tokmanni is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wartsila Oyj Abp and Tokmanni Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokmanni Group Oyj and Wartsila Oyj is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wartsila Oyj Abp are associated (or correlated) with Tokmanni Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokmanni Group Oyj has no effect on the direction of Wartsila Oyj i.e., Wartsila Oyj and Tokmanni Group go up and down completely randomly.
Pair Corralation between Wartsila Oyj and Tokmanni Group
Assuming the 90 days trading horizon Wartsila Oyj Abp is expected to generate 1.1 times more return on investment than Tokmanni Group. However, Wartsila Oyj is 1.1 times more volatile than Tokmanni Group Oyj. It trades about 0.12 of its potential returns per unit of risk. Tokmanni Group Oyj is currently generating about 0.05 per unit of risk. If you would invest 1,056 in Wartsila Oyj Abp on February 3, 2024 and sell it today you would earn a total of 714.00 from holding Wartsila Oyj Abp or generate 67.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wartsila Oyj Abp vs. Tokmanni Group Oyj
Performance |
Timeline |
Wartsila Oyj Abp |
Tokmanni Group Oyj |
Wartsila Oyj and Tokmanni Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wartsila Oyj and Tokmanni Group
The main advantage of trading using opposite Wartsila Oyj and Tokmanni Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wartsila Oyj position performs unexpectedly, Tokmanni Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tokmanni Group will offset losses from the drop in Tokmanni Group's long position.Wartsila Oyj vs. Fortum Oyj | Wartsila Oyj vs. Nordea Bank Abp | Wartsila Oyj vs. Sampo Oyj A | Wartsila Oyj vs. Neste Oil Oyj |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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